In 2011, venture capitalist Marc Andreessen declared that “software is eating the world.” Nowadays, AI is starting to devour software.
Instead of helping the industry improve, new AI tools and agents could end up replacing some software products entirely.
This fear crystallized in recent weeks with three developments: Anthropic’s introduction of a new autonomous AI agent called Cowork, the launch of industry-specific Cowork plugins, and the rise of OpenClaw, an open-source AI assistant that is rapidly spreading through messaging apps.
OpenAI added to the fears Thursday by rolling out Frontier, a platform that helps companies create and run AI peers who aren’t locked behind a single user interface or application.
“Is this the end for software?” Raimo Lenshow, a veteran technology analyst at Barclays, wrote in a recent note to investors. “The current software situation feels very unique, with the big overhang of how AI will impact the space in the long term.”
Double AI threats
Today, companies get things done through a complex collection of different software services that help them collect data, track financials, sell products, and manage employees, customers, supply chains, and contracts. (If you’ve ever had to log into Workday, you know what I mean).
Generative AI threatens these applications in two major ways. First, as employees become more efficient with the help of AI tools, companies may need to purchase fewer business software subscriptions. That would negatively affect the growth of the number of ‘seats’, or the number of subscriptions that software companies sell. Every employee has a seat, so if there are no new hires, growth will stagnate.
The second threat is more existential. If AI tools and AI agents become good enough, companies could completely replace the software they use and rely instead on new AI-powered workflows. And with AI coding tools showing big improvements lately, companies can even develop their own software, without having to buy it from established vendors.
The anthropic shock
This is why Anthropic’s recent announcements have hit the software sector so hard.
Anthropic’s Cowork marks a clear step beyond chatbots. Instead of simply answering questions, Cowork can schedule and execute tasks in multiple steps on a user’s computer. Users can grant it access to folders, files, and applications, allowing the AI to clean documents, build spreadsheets and slide decks, analyze data, automate workflows, and even log into web apps to gather information.
Analysts at Barclays describe Cowork as closer to what Microsoft originally envisioned for Copilot: a true digital worker, but with much greater autonomy. Shares of Microsoft are down about 12% in the past week.
Cowork is designed for non-technical and semi-technical users, such as marketers, project managers, and finance professionals, who can manage it in plain English. This matters because it weakens the traditional value proposition of many SaaS tools. When an AI agent can organize files, generate reports, build dashboards, and automate routine workflows on demand, the need for a dedicated, single-purpose application begins to become less obvious.
The threat became more concrete when Anthropic followed up this week by launching plugins for Cowork. These plugins effectively turn the AI into a specialist for functions such as sales, finance, legal, marketing and customer support, connecting it directly to internal data sources and tools. Anthropic has even launched a starter set of plugins, indicating an ecosystem approach rather than a closed product.
“This is another striking example of an AI tool that is lowering the barrier to entry, gaining traction and disrupting existing workflows,” said Michelle Miller, co-head of the Enterprise Software Technology group at consulting firm AlixPartners.
Why this affects SaaS business models
For years, companies bought software because building it themselves was too slow and too expensive. Generative AI turns that equation around. Tools like Anthropic’s Claude, OpenAI-powered coding assistants, and products from StackBlitz, Replit, and others allow non-engineers to create custom tools with relatively simple English-language prompts.
Netlify CEO Matt Biilmann has said his own employees have used AI to build internal replacements for SaaS products such as survey and quote tools. Venture capitalist Martin Casado has described how building a personal CRM with AI was easier than learning a complex, off-the-shelf product. Salesforce, the leading CRM software provider, is down about 40% in the past year.
Stackblitz CEO Eric Simons said his startup has created internal AI agents for many workflows, including business intelligence, data analytics, coding, product development, customer support and outbound sales.
“As a result, there are many SaaS vendors that we probably would have used previously, but are no longer relevant,” he told Business Insider.
“The industry is waking up to the fact that AI is becoming extremely good at creating software autonomously,” he added. “This raises questions about what ‘moats’ exist for established companies that are not themselves pioneering AI labs.”
The squeeze
This shift is especially dangerous for mid-sized SaaS companies. According to AlixPartners, they are squeezed between agile AI-native startups on the one hand and technology giants that bundle AI into existing platforms on the other. Business buyers, under pressure to cut costs, are increasingly asking why they need five tools when one AI tool or agent can do some or most of the work.
Prices add another layer of excitement. AI systems are expensive to operate, making traditional per-seat prices harder to justify. Companies like ServiceNow are experimenting with hybrid and usage-based models. CEO Bill McDermott has emphasized that AI won’t hurt results, but investors remain skeptical. ServiceNow shares are down 25% in the past month.
The OpenClaw moment
If Cowork represents a top-down push from a well-funded AI lab, OpenClaw, formerly called Moltbot, shows how disruption can also come from the bottom up.
Created as a personal project and released as open source, OpenClaw is a messaging-first AI assistant that works on platforms like WhatsApp, Slack, and iMessage. OpenClaw relies heavily on Anthropic’s Claude models and remembers context, proactively directs users, and can automate tasks using browser actions, scripts, and scheduled tasks. After about a month of relative obscurity, it went viral in late January.
What caught investors’ attention was not just OpenClaw’s popularity, but also what it represents. Instead of logging into multiple apps, users interact with an AI agent in a chat window and let it orchestrate tasks behind the scenes. In effect, the interface becomes a conversation, not a software menu.
Barclays analysts noted that OpenClaw’s underlying “gateway,” which routes tasks between agents and tools, is similar to the orchestration layer that many enterprise software vendors are now rushing to build.
The difference is that OpenClaw is free, open source, and user-controlled – a worrisome combination for established software companies that rely on expensive licenses. It is also a potential problem because the direct user relationship is now managed by OpenClaw, and not by software vendors.
Eat or be eaten
None of this means that software will disappear overnight. Core registration systems – databases, payroll systems, ledgers – remain deeply embedded in business operations. But the layers around it become liquid. Dashboards, workflows, reports, and even entire applications can now be generated and used directly by AI agents.
For SaaS companies, the message is grim. Adapt by embracing agents, flexible pricing, and AI-native design – or you risk becoming the next to consume AI.
“AI is forcing change in software development, AI management and data security, go-to-market operations, pricing models, valuation frameworks and business structure,” said AlixPartners’ Miller. “Software companies that master these transitions will determine the winners in the next era, and those that cannot adapt will be left out as the industry’s foundations are redrawn.”
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